old economics multiple choice questions

all of the following are arguments against minimum wage laws EXCEPT

minimum wage laws tend to provide incentives to businesses to invest in capital substitutes

Fiat money is

money that has value because of government law or regulation.

suppose 20 employee-hours can produce 75 units of output. assuming the law of diminishing marginal returns is present, to produce 150 units of output will require...

more than 20 additional employee hours ( 20 x 2 = 40)

rent control (setting a maximum rent) is an example of a ________ and will only have an effect on the outcome in the rental housing market if the cap is set _________ the equilibrium rent

price ceiling; below

suppose the market for peaches is initially in equilibrium. what will happen to the equilibrium price and quantity in the peach market when the wages of farm laborers rise and there is an increase in the population. in the new equilibrium,

price would be higher, but the direction of the quantity change cannot be determined

in markets for goods associated with negative externalities, private markets will produce ________ while in markets for goods associated with positive externalities, private market will produce ___________ of the good (relative to the social optimum)

too much; too litte

free trade can be a very contentious issue. all of the following statements regarding trade liberalization are true EXCEPT

trade is unequivocally welfare enhancing, so there are no losers - only winners

the socially optimal level of output is __ and at that output level in the marginal external benefit of an additional vaccination is ___

60; $4 (look at marginal private benefit)

use the diagram below to answer this question. at the monopolist's profit maximizing price of ___ and quantity of ___, the deadweight loss will be

60; 20 units; $266

free trade

can have winners and losers

enforcement of anti-drug laws

-can reduce drug use and sales even if law enforcement doesn't catch all offenders -increases the cost to buyers and sellers of drugs

the goal of antitrust laws is to

-promote competition and prevent use of monopoly power on output and price -stop development of large companies -monitor and regulate revenues of corporations -regulate economic and accounting profits

The economy is heating up and concerns of inflation are present. To ease this situation, the Federal Reserve can

-sell securities. -increase the discount rate. -increase the required reserve ratio.

Monetary and fiscal policy interventions have their advantages and disadvantages. Which of the following is NOT true?

An advantage of fiscal policy is that it is very apolitical and thus not subject to swings in the political cycle (e.g., elections).

VMPL

MPL(Price Output)

Which of the following is NOT a role of money?

Unit of standard

the graph to the right describes the production possibilities on the island of santorini. suppose it has a comparative advantage in the production of grapes and its trading partner offers to trade 100 tons of their olives for 300 tons of santorinis grapes.. santorini should...

accept because the trade will leave them at a level of consumption that is more than what they could produce on their own

the pay gap for female and male white workers

all except for d (due to discrimination) bc they are white

Federal debt is

an accumulation of deficit borrowing that has not been paid off.

decrease in demand of salsa

an increase in the price of chips (a complement for salsa)

your business has a patent on effective allergy drug, but next year your patent will expire (and thus your monopoly will end). the effects in the market will result from the expiration of the patent would include

an increase in the quantity of the drug traded; an increase in society's welfare (total surplus); a decrease in market price; an increase in consumer surplus

the cost of going to college includes

both intuition and the value of the student's time

in the market for illegal drugs, which of the following has/have contributed to market failure?

both negative externalities and imperfect information contribute to the market failure

MPL

change in total product/change in input

jane produces earrings and accepts the market price of $10 per pair of earrings, her marginal cost on the last pair of earrings she produces is $12. to maximize profit and produce an optimal quantity of earrings jane should

decrease output

economic growth can result from

increase in the amount of productive resources available

economic growth can result from a(n)

increase in the amount of productive resources available

When expansionary fiscal and monetary policy is used to stimulate the economy a potential trade off may be

inflationary pressure.

Each of the following is counted in current year U.S. Gross Domestic Product EXCEPT:

james purchases a used car from the local Honda dealership in Portland

in general, monopolistic market produce _________ output, charge __________ prices, and earn ______________ profits than perfectly competitive markets

less; higher; equal

family reunion vs ticket already bought for hawaii.. should you let ticket affect decision?

no because it is a sunk cost

the practice of charging higher insurance rates to male driver under the age of 25 regardless of their driving history illustrates

statistical discrimination

supply of backpacks > demand of backpacks

surplus (find by supply - demand)

prohibitions in the US was in place from 1920 to 1933. when prohibition ended in 1933, what effect on equilibrium price and quantity of alcohol would economic theory predict occurred?

the equilibrium quantity increased, but the effect on price would be indeterminate

Deflation is

the fall in the general level of prices in an economy

supply curves are generally ______ sloping because ___________

upward; of the principle of increasing marginal cost

of the following which is NOT a determinant of labor productivity?

wages

you have consumer one slice of pizza. if you consume a second slice. your total cost increases from $3 to $7 and your total benefit increases from $6 to $11. if you consume the second slice and then a third one, your total cost increases from $7 to $12 and your total benefit increases from $11 to $15. according to marginal decision rule...

you should eat the second slice but not the third one